GMS Reports First Quarter Fiscal 2021 Results
GMS Inc. (“GMS”), a leading North American specialty distributor of interior building products, reported financial results for the first quarter of fiscal 2021 ended July 31, 2020.
First Quarter Fiscal 2021 Highlights
(Comparisons are to the first quarter of fiscal 2020, except where noted.)
– Net sales of $802.6 million decreased 5.3%; organic net sales decreased 5.7%.
– Gross margin of 32.5% improved 20 basis points.
– Net income of $27.2 million, or $0.63 per diluted share, increased 9.7%.
– Adjusted net income of $40.3 million, or $0.94 per diluted share, increased 7.5%.
– Adjusted EBITDA margin of 10.3% improved 40 basis points.
– Net debt leverage was 3.0 times as of the end of the first quarter of fiscal 2021 compared to 2.9 times as of the end of the fourth quarter of fiscal 2020 and 3.7 times as of the end of the first quarter of fiscal 2020.
– As of July 31, 2020, the Company had cash on hand of $139.7 million, and $372.5 million of available liquidity under its revolving credit facilities.
“Our first quarter results reflect outstanding execution by our entire team against the backdrop of a business environment that remained challenging throughout the period,” said John C. Turner, Jr., President and Chief Executive Officer. “Despite lower sales resulting from the impact of the COVID-19 pandemic on our business and overall industry, we generated higher net income and Adjusted net income compared to the first quarter of last fiscal year, as well as year-over-year expansion of both gross margin and Adjusted EBITDA margin. This improvement is a result of the rapid alignment of our cost structure to current demand, our balanced product and market mix, which has been strengthened through execution of our growth initiatives, and a relentless focus on serving our customers with operational excellence. At the same time, the health and safety of our employees, business partners and communities remains our top priority, and all of us at GMS continue to express our gratitude to all those who have been and continue to be on the frontlines every day during these unprecedented times.”
Mr. Turner continued, “While there is continued uncertainty regarding the near-term outlook for the construction industry and the broader economy, I am confident in our team’s ability to continue to quickly and nimbly address challenges and leverage opportunities. We firmly believe the foundation we have built at GMS, coupled with our strong liquidity and ability to generate cash, positions us well for the duration of this period and for the long term.”
First Quarter Fiscal 2021 Results
Net sales for the first quarter of fiscal 2021 were $802.6 million, down 5.3%, compared to $847.2 million for the first quarter of the prior fiscal year, as a result of continued COVID-19 related market declines. Organic net sales declined 5.7%.
– Wallboard sales of $328.0 million decreased 4.0% (4.1% on an organic basis) compared to the first quarter of fiscal 2020, principally due to a decline in both price and mix and, to a lesser extent, lower volumes.
– Ceilings sales of $113.7 million decreased 11.9% (12.5% on an organic basis) year over year driven by lower volumes and product mix, partially offset by higher pricing.
– Steel framing sales of $110.5 million decreased 16.2% (16.4% on an organic basis) year over year due primarily to a decline in volumes and pricing, partially offset by higher product mix.
– Other product sales of $250.4 million increased 2.3% (1.5% on an organic basis) year over year due to positive contributions from acquisitions and execution of growth initiatives.
Year over year sales declines were more pronounced in ceilings and steel framing, as these product categories are tied primarily to commercial construction which remained relatively more challenged than the residential market during the quarter.
Gross profit of $260.5 million decreased 4.8% compared to the first quarter of fiscal 2020 primarily due to lower sales. Gross margin of 32.5% improved 20 basis points year over year as a result of favorable product mix and purchasing initiatives.
Selling, general and administrative (“SG&A”) expense as a percentage of net sales was 22.8% for the quarter compared to 23.0% in the first quarter of fiscal 2020. Adjusted SG&A expense as a percentage of net sales was 22.2% compared to 22.6% in the prior year quarter. This 40 basis point improvement directly resulted from the proactive measures taken to defer or limit non-essential operating and other discretionary expenses and to align the Company’s cost structure with the current demand environment resulting from the COVID-19 pandemic. These benefits were partially offset primarily by deflationary market pricing of certain of the Company’s products.
Net income of $27.2 million, or $0.63 per diluted share, increased 9.7% from $24.8 million, or $0.59 per diluted share, in the first quarter of the prior fiscal year. Adjusted net income of $40.3 million, or $0.94 per diluted share, increased 7.5% from $37.5 million, or $0.89 per diluted share, in the first quarter of the prior fiscal year. Adjusted EBITDA of $83.1 million compared to $83.6 million in the first quarter of the prior fiscal year. Adjusted EBITDA margin of 10.3% improved 40 basis points from 9.9% a year ago.
Balance Sheet and Liquidity
As of July 31, 2020, the Company had cash on hand of $139.7 million and total debt of $1.0 billion. Net debt leverage was 3.0 times as of the end of the quarter compared to 2.9 times as of the end of the fourth quarter of fiscal 2020 and 3.7 times as of the end of the first quarter of fiscal 2020.
As is typical during the Company’s first quarter of the fiscal year, the Company recorded a use of cash from operating activities and free cash flow, which totaled $15.7 million and $20.5 million, respectively, in the first quarter. This compared to a use of cash from operating activities and free cash flow of $12.4 million and $18.3 million, respectively, in the first quarter of the prior fiscal year.
For the full first quarter results, click here.
About GMS Inc.
Founded in 1971, GMS operates a network of 260 distribution centers across the United States and Canada. GMS’s extensive product offering of wallboard, suspended ceilings systems, or ceilings, and complementary construction products is designed to provide a comprehensive one-stop-shop for our core customer, the interior contractor who installs these products in commercial and residential buildings.
Leslie H. Kratcoski – Investor Relations – email@example.com – (770) 723-3306
Source: GMS, Inc.